CONSOLIDATED SUBSIDIARY OVERVIEW
HOUSTON, Aug. 1, 2016 /PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO) today reported results for the second quarter of 2016.
Three Months Ended
Thousands of dollars, except per share data
June 30, 2016
March 31, 2016
Operating (loss) income
Adjusted operating income
Net (loss) income
Adjusted net income
(Loss) earnings per diluted share
Adjusted earnings per diluted share
"Despite facing both market and operational headwinds during the quarter, Diamond was able to record adjusted earnings per share of $0.16," said Marc Edwards, President and Chief Executive Officer.
Results for the second quarter were significantly impacted by impairment charges and related taxes of $612 million, or $4.46 per diluted share, primarily relating to the carrying value of eight semisubmersible rigs and associated inventory.
Operational efficiency of the Company's fleet was 92.7% in the second quarter, compared to 98.2% in the first quarter of 2016. The decline in operational efficiency was primarily driven by issues experienced within the ultra-deepwater floater category, specifically as it relates to four unplanned retrievals of blowout preventers.
Utilization in the deep-water segment increased by 25% in the second quarter of 2016, compared to the first quarter of 2016. The increase was driven by the Ocean Apex beginning its 18-month contract with Woodside in Australia at a rate of $285,000 per day. The rig was recently awarded a three-month extension at $205,000 per day, which will keep the rig working until February 2018.
During the quarter, the Company elected to cold stack the Ocean Endeavor and Ocean Scepter. The Company's decision was guided by its desire to minimize costs associated with the rigs, while ensuring the rigs are preserved in such a manner as to enable a quick reactivation when the market recovers. Additionally, the Company intends to scrap the Ocean Quest and Ocean Star.
As of June 30, 2016, the Company's total contracted backlog was $4.4 billion, which represents 28 rig years of work. Approximately 86% of the Company's available ultra-deepwater rig days for the remainder of 2016 are contracted with top tier customers.
Edwards also commented on the recently announced Helical Buoyancy™ riser joint development agreement with Trelleborg, stating, "This is another example of Diamond Offshore differentiating itself in an oversupplied market. As with our Pressure Control by the Hour™ service model, Diamond Offshore is providing the industry with thought leadership to drive efficiencies and lower the cost of operating offshore."
Reflecting on the market, Edwards went on to say, "Although the market continues to be challenged, our focus is on striking a balance between controlling costs and laying the foundation to ensure Diamond Offshore is well positioned for the recovery."
A conference call to discuss Diamond Offshore's earnings results has been scheduled for 7:30 a.m. CDT today. A live webcast of the call will be available online on the Company's website, www.diamondoffshore.com. Those interested in participating in the question and answer session should dial 800-247-9979 or 973-321-1100, for international callers. The conference ID number is 47948706. An online replay will also be available on www.diamondoffshore.com following the call.
ABOUT DIAMOND OFFSHORE
Diamond Offshore is a leader in offshore drilling, providing contract drilling services to the energy industry around the globe. Additional information and access to the Company's SEC filings are available at www.diamondoffshore.com. Diamond Offshore is owned 53% by Loews Corporation (NYSE: L).
Statements contained in this press release or made during the above conference call that are not historical facts are "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements are inherently uncertain and subject to a variety of assumptions, risks and uncertainties that could cause actual results to differ materially from those anticipated or expected by management of the Company. A discussion of the important risk factors and other considerations that could materially impact these matters as well as the Company's overall business and financial performance can be found in the Company's reports filed with the Securities and Exchange Commission, and readers of this press release are urged to review those reports carefully when considering these forward-looking statements. Copies of these reports are available through the Company's website at www.diamondoffshore.com. These risk factors include, among others, risks associated with worldwide demand for drilling services, level of activity in the oil and gas industry, renewing or replacing expired or terminated contracts, contract cancellations and terminations, maintenance and realization of backlog, competition and industry fleet capacity, impairments and retirements, operating risks, changes in tax laws and rates, regulatory initiatives and compliance with governmental regulations, construction of new builds, casualty losses, and various other factors, many of which are beyond the Company's control. Given these risk factors, investors and analysts should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of this press release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based.
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Six Months Ended
Revenues related to reimbursable expenses
Contract drilling, excluding depreciation
General and administrative
Impairment of assets
Restructuring and separation costs
Gain on disposition of assets
Total operating expenses
Other income (expense):
Foreign currency transaction (loss) gain
(Loss) income before income tax benefit (expense)
Income tax benefit (expense)
(Loss) income per share
Weighted-average shares outstanding:
Shares of common stock
Dilutive potential shares of common stock
Total weighted average shares outstanding
RESULTS OF OPERATIONS
Total Contract Drilling Revenue
Revenues Related to Reimbursable Expenses
CONTRACT DRILLING EXPENSE
Total Contract Drilling Expense
OPERATING (LOSS) INCOME
Reimbursable expenses, net
General and administrative expense
Impairment of assets
Restructuring and separation costs
Gain on disposition of assets
Total Operating (Loss) Income
CONDENSED CONSOLIDATED BALANCE SHEETS
Cash and cash equivalents
Accounts receivable, net of allowance for bad debts
Prepaid expenses and other current assets
Assets held for sale
Total current assets
Drilling and other property and equipment, net of
LIABILITIES AND STOCKHOLDERS' EQUITY
Other current liabilities
Deferred tax liability
Total liabilities and stockholders' equity
AVERAGE DAYRATE, UTILIZATION AND OPERATIONAL EFFICIENCY
(Dayrate in thousands)
Average dayrate is defined as contract drilling revenue for all of the specified rigs in our fleet per revenue earning day. A revenue earning day is defined as a 24-hour period during which a rig earns a dayrate after commencement of operations and excludes mobilization, demobilization and contract preparation days.
Utilization is calculated as the ratio of total revenue-earning days divided by the total calendar days in the period for all specified rigs in our fleet (including cold-stacked rigs, but excluding rigs under construction). As of June 30, 2016, our cold-stacked rigs included four ultra-deepwater semisubmersibles, four deepwater semisubmersibles, four mid-water semisubmersibles and five jack-up rigs.
Operational efficiency is calculated as the ratio of total revenue-earning days divided by the sum of total revenue-earning days plus the number of days (or portions thereof) associated with unanticipated equipment downtime.
Non-GAAP Financial Measures (Unaudited)
To supplement the Company's unaudited condensed consolidated financial statements presented on a GAAP basis, this press release provides investors with adjusted operating income, adjusted net income and adjusted earnings per diluted share, which are non-GAAP financial measures. Management believes that these measures provide meaningful information about the Company's performance by excluding certain charges that may not be indicative of the Company's ongoing operating results. This allows investors and others to better compare the company's financial results across previous and subsequent accounting periods and to those of peer companies and to better understand the long-term performance of the Company. Non-GAAP financial measures should be considered to be a supplement to, and not as a substitute for, or superior to, financial measures prepared in accordance with GAAP.
Three Months EndedJune 30, 2016
Reconciliation of As Reported Operating (Loss) Income to Adjusted Operating Income:(In thousands)
As reported operating loss
Impairments and other charges:
Impairment of rigs and associated inventory (1)
Reconciliation of As Reported Net Loss to Adjusted Net Income:(In thousands)
As reported net loss
Tax effect of impairments and other charges:
Impairment of rigs and associated inventory (2)
Discrete tax items (3)
Reconciliation of As Reported Loss per Diluted Share to Adjusted Earnings per Diluted Share:
As reported loss per diluted share
Other discrete tax items (3)
Represents the aggregate amount of impairment losses recognized during the second quarter of 2016 related to eight of our drilling rigs and associated inventory.
Represents the income tax effects of the aggregate impairment loss recognized in the second quarter of 2016.
Represents the aggregate of certain discrete income tax adjustments recognized during the second quarter of 2016, primarily related to valuation allowances for current and prior year tax assets associated with foreign tax credits, which we no longer expect to be able to utilize to offset income taxes in the U.S. tax jurisdiction.
Contact: Samir AliSr. Director, Investor Relations & Corporate Development(281) 647-4035
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SOURCE Diamond Offshore Drilling, Inc.